Gov. Sean Parnell's proposal to lower oil taxes on companies that drill in Alaska got its first hearing in the state Senate Tuesday afternoon, with less than two weeks remaining in the session. Parnell introduced the bill on Feb. 10, proposing to raise tax credits to 30 percent for all drilling and well-work expenses.
The bill is estimated to reduce state revenue by about $350 million a year, although the state says there could be offsetting revenue if the tax incentives spur new oil production.
Legislators pressed Revenue Commissioner Pat Galvin on how he knew the tax credits would lead to new wells rather than just reward the oil companies for drilling they were going to do anyway. Galvin responded that he couldn't say for certain, but that the state's existing exploration tax credits are making a difference.
"It's worth putting this out there and seeing if we get that increased activity as a result," Galvin said.
Senate Resources Committee co-chairman Bill Wielechowski said that's not good enough for a policy call that could be worth hundreds of millions of dollars a year in lost revenue.
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